Federal Reserve Chairman Jerome Powell gives a press conference following the surprise announcement that the Fed will cut rates on March 3, 2020 in Washington, DC.
Eric Baradat | AFP | Getty Images
Federal Reserve Chairman Jerome Powell is a big Wall Street favorite, nominated for a second term by President Joe Biden, though there is significant disagreement over some aspects of Fed policy.
The CNBC Fed poll for April found that 76% of respondents believe President Joe Biden Powell will vote again. Powell was named chairman by President Donald Trump and began his first four-year term in 2018. It ends in early 2022, and presidents typically announced their election in the summer or fall before the chairman’s term expires.
Eighteen percent of 34 respondents, which include fund manager strategists and economists, believe Biden will choose someone other than Powell. Leading candidates include Fed Governor Lael Brainard and White House Economic Advisor Jared Bernstein.
Not only do respondents believe Biden will appoint Powell, 82% believe he should. The result is noteworthy as the survey reveals clear disagreements with some of the Fed’s policies. Many believe that the Fed’s $ 120 billion monthly asset purchases are not required to help the economy and that given much higher budget spending, the Fed should tighten sooner.
When asked if the risk of climate change is an appropriate measure to help the Fed oversee financial institutions, 64% said they don’t, while 36% said so. Powell and other Fed members have increasingly spoken about climate change, suggesting that it is important for financial institutions to incorporate risk into their loan portfolios. The Fed is currently asking financial institutions whether and how they consider the risks of climate change. But Powell tasked the Fed with figuring out whether it should develop more formal metrics. While Powell said such an assessment is within the Fed’s mandate, he has also insisted that the Fed is not a federal agency that will or should take the lead in fighting climate change.
More than half (52%) said Biden’s plan to cut CO2 emissions in half by 2030 is a worthwhile goal, although most believe it will reduce overall economic growth.
Another area of disagreement is the use of minority unemployment gaps to assess when and whether to change monetary policy. It’s another topic that Powell and the Fed have been talking about increasingly, suggesting that there is at least one metric that will be closely followed in deciding when to raise interest rates. However, respondents disagree, with 46% saying it should be a factor in determining monetary policy and 49% saying it shouldn’t.